Real Estate

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Introduction

What is Real Estate?

Real Estate is one the most crucial and important investment avenues that has a deep impact on one’s personal and investing journey.

This module intends to simplify the same.

“Real estate is the land along with any permanent improvements attached to the it, whether natural/man-made—including water, trees, minerals, buildings, homes, fences, & bridges. Real estate is a form of real property that is tangible.

People often use terms land, real estate, and real property interchangeably, but there is a thin distinction between them, specifically:

The term ‘land’ is used for the part of the earth's surface that is not covered by water.

Real Estate is land plus man-made additions like Buildings.

Real property includes the physical property of the real estate, but it expands its definition to include a bundle of ownership & usage rights.

There are four types of real estate:

Residential: The most common definition of residential real estate is an area developed for people to live in. Residential real estate is often the important investment a person owns, and the value of the real property on the estate is subject to shifts in the real estate market. Many people invest in residential real estate with the dual objective of profiting from price appreciation as well as rental lease.

Commercial:  Commercial real estate includes malls, shopping centres, hospitals, educational institutions, hotels, and offices. Apartment buildings are considered commercial, even though they're used for residences because they're owned to produce income as rent.

Industrial: Industrial real estate includes manufacturing properties as well as warehouses. These buildings can be used for all types of functions like storage, distribution of goods, etc. 

Vacant Land: Vacant Land refers to any parcel or combination of parcels of real property without industrial, commercial, & residential buildings.

Indian Real Estate Industry

In India, Real Estate and its related ancillaries are the largest employer second only to agriculture. In the past few years, the Real Estate sector has been growing at a CAGR of 30%, making it an excellent investment. The real estate industry is divided into four sub categories, viz. Housing, Retail, Hospitality, & Commercial.

The real estate sector in India is expected to reach a market size of US$1 trillion by 2030 from US$120 billion in 2017 and contribute 13% to the country’s GDP by 2025. Retail, hospitality, and commercial real estate are also growing speedily, providing the much-needed infrastructure for India's burgeoning urban population & its growing needs. 

 

According to the Economic Times Housing Finance Summit, about 3 houses are built per 1,000 people per year compared to the required construction rate of five houses per 1,000 population. As per some estimates, the current shortage in urban housing stands at about 10 million units. An additional 25 million units of affordable housing shall be required by 2030 to meet the country’s growing demand.

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